Established September 2006

Free Wine, Food and Gifts Plus a Tour of an Epic Real Estate Disaster

Astoria Central Park West begins liquidation sales today with a big event for the public from 6 to 9 PM. They are featuring wine tasting, cocktails, hors d'oeuvres, desserts and gift bags as well as tours of model units.

Honest and ruthless; I can do that. Lennar and its equity partner want out of this disaster, and they would take the hungry and homeless — if they qualified for a loan. For years, we have stared with wonder, "What fools will buy there?" and live in the warmth of silent defeat like those in the North Korea Towers. We are about to find out because Astoria Central Park West is opening for tours and sales.

I first profiled Astoria Central Park West on April 4, 2009. In that post, I noted, "… Astoria at Central Park West is a clear loser — (for) the ownership entity that developed this property (Lennar has only a small investment). None of these units sold at the peak, and now that we are nearing a long, flat bottom, these units are hitting the market. The early buyers will be knife catchers, but in a couple of years, some of these units will be good buys — at about $300,000 to $350,000." The properties for sale now are floors 7-10 which should carry a premium to the lower floors. I wonder how many of the 3rd floor units they sold for $519,000? I wonder how those owners feel about the new and lower prices? Perhaps I will ask again when they sell floors 11-15….

With this profile, the grand opening gets much more exposure than it received through the concerted efforts of its marketing department. No other resource reaches thousands of people specifically interested in Irvine real estate, but they do have to give up control of the message. If an extra hundred or more people attend due to this post, do you think they will thank me? I won't hold my breath.

I don't know what the actual asking prices are on these units as the liquidators sellers have been careful not to publish detailed information that might discourage people from attending. The numbers I have used above are based on their website as well as rumor and speculation, and they could be very wrong.

I heard through various industry sources that Lennar had projected an average price point of around $750,000 for these units. As I have pointed out on numerous occasions with the North Korea Towers (Marquee at Park Place), cashflow valuations support about half of 2006 price levels. The North Korea Towers are likely worse due to the extremely high HOA dues, but then again, prices there have not hit bottom yet. I don't know what the HOA dues are at Astoria Central Park West, but they will likely be quite high too.

Current bids from all-cash or heavy-cash buyers at the North Korea towers are in the $350,000 to $400,000 range. Of course, none of those transact because lenders are unwilling to take the $500,000+ write-offs necessary to exit the building. Someone yelled fire (probably me), and lenders decided to stay and burn. The asking prices for the Astoria units are starting in the low $400,000s, and I would not be surprised if Lennar seduces some of the bidders from the North Korea Towers who may be enamored with the Park Place, but are tired of waiting for short-sale approval.

All Sizzle, No Meat

If you click on the plans tab, you are shown a floor-by-floor overview of the units, but unit detail is completely absent. It is like looking at a subdivision map without the house floorplans; few care about the arrangement of units, but many would like to know how these units lay out. Putting the overview without the unit detail frustrates a potential buyer looking for information.

The features tab contains the obligatory picture of a barefoot couple lovingly enjoying their shoebox. I appreciate evocative words, but "sophisticated bathrooms?" Bathrooms don't seem like something that can be sophisticated. Sophisticated: 1 (of a person, ideas, tastes, manners, etc.) altered by education, experience, etc., so as to be worldly-wise; not naive ; 5 of, for, or reflecting educated taste, knowledgeable use, etc. Do sophisticated people in their sophisticated bathrooms have sophisticated bowel movements?–I assume it smells great, right?

If you never noticed all the bare feet in new home ads, you will now (sorry). Some marketing consultant long ago noticed that bare feet suggests the comforts and coziness of home. Doesn't the couple in the picture look like they have the life all of us want?

The sizzle on the website is real; the photo gallery shows many spectacular pictures of first-rate photography. IMO, they made a mistake by putting the inside unit pictures below the scroll line where most won't see them, but the photos themselves are marvelous.

The financing tab had an interesting surprise:

Builders often buy-down the interest rate to artificially lower the payments for early years. Personally, I think the practice is egregious differing in no way from the subprime 2/28 programs that proved so disastrous. Lennar and their partner obviously do not care about the long-term viability of ownership of buyers; any who use their advertised financing will not be living there 7 years from now. The the builder bought down the interest rate on an ARM which is taken out at the bottom of the interest rate cycle; this interest rate is going to rise, and it is going to make future payments unaffordable. I suppose these will appreciate so much over the next 7 years that it won't matter, right? Bubble thinking is not dead.

While we are on the subject of financing, I want to share a recent email I received. The subject was, "WE CAN SAVE YOUR DEAL"

I can honestly say that if an IHB client needed a 60% DTI to complete a deal that I would strongly advise them to pass rather than commit to a lifetime of debt servitude or near-certain foreclosure. As long as these lending practices persist, lenders will continue to lose money, and we will continue to have inflated, unmoving prices.

Astoria Central Park West

From 6 to 9 PM Astoria Central Park West is featuring wine tasting, cocktails, hors d'oeuvres, desserts and gift bags as well as tours of model units. I may see you there, but you won't notice me in disguise.

Hey IR, you need to mouse-over the floor maps in order to click on individual plan details. I still question the value of highrise living in Irvine though. Especially since the location sits between a freeway and a office park. But since I drive by this blight every day, I’m glad that Lennar is trying to finish the project finally (after 4 years). I’ll probably stop by the office tonight just for shits and giggles. 😆

If the State would just buy these and the North Korea Towers across the street, they could put up a maximum security perimeter and you could have prisons IN Irvine!
Oh wait, these are already debt prisons for those living there….nevermind Arnold.

That’s a great idea. The state could buy these up and turn them into homeless shelters and drug rehab centers and the good folks in Irvine can rest assured that their community is stepping up to save the world. There might be one or two NIMBYs but I’m sure the majority of genuine do-gooders will rule the day.

My wife and I looked at these last year (for entertainment only, of course). Every unit on the 405 freeway side has a severe noise problem. It’s fine in lockdown, but crack a window or a balcony door and it sounds like you’re standing next to a jet engine. We LOVE balconies…and it would be impossible to sit on these at anytime of the day…you’d have to yell to each other just to talk.

The beginning of the tour was impressive. White glove valet service for your guests, a “wine cellar” where you can store your own wine, a “boardroom” to have meetings in and the pool has great views.

We found most of the units small, cramped, dark and without the high ceilings we’ve seen in other lofts. The penthouse…is incredible. We loved walking through it, two stories of glass and a gigantic open air rooftop deck.

The agent at the time said someone had bought one of the penthouses and needed a place for his “staff” so he bought one of the other regular units to house them.

I asked if the huge “hole” next to the building was going to be a lake or a park…no, it will be an underground parking lot.

Of course, it was rediculously overpriced and obnoxious association fees. Nice to look at though.

You can then take a trip down to the wine cellar and have a nice glass of Fox Barn’s Harvest while painting little French moustaches on each other using eyebrow pencils and saying ‘Oui!’ over and over again.

Someone must of liked Vegas c.a. 1960’s. Brings back memories of the hotel casinos.
Might be similar, gamble your money away on a long shot. The odds are with the house, but it can be entertaining.

Back with the best of toxic lending. How are the lenders going to get the govt (i.e., taxpayers to pick-up this tab)? Is it time for another round of flushing the average Joe’s pension plans down the toilet again?

The vampire lenders like the living dead. Just when you think they’re gone, they come back. They have eternal life but are dead and have others willing join them by their seducing siren songs and promises. I like it better with the loan sharks, they didn’t bill the taxpayers for their bad loans.

Thought the loan was a strange one as well. It appears to be a 6/1 ARM. There are 5, 7, and 10/1’s, but this loan is an oddity. What does it tell us…. That Fannie, Freddie, and HUD won’t touch these units. This is likely private money that is being used to overcome owner occupancy issues. They’ll build up to 50% owner occupancy, then the Agencies or HUD will finish off the rest if they ever sell.

To be clear, I like ARM loans. They serve a purpose in specific situations. I don’t know how eager buyers will be though to close today on ARM loans while 30 fixed mortgages are well priced. They need to dump the ARM, even though their costs are cheaper to create this kind of financing, and put in place a low cost fixed that is also assumable. This ARM will be assumable in six years, but who would want to buy a unit in the complex and assume a 10% ARM rate loan?

Sounds like we are in for a tough 2010l. The Corona couple who bought the tract home for 700k were “able to keep their home after a loan modification, but their investment would likely never pay off”. The wife admitted they learned a lesson: “You don’t need it – it’s not worth it”. These people will probably never be able to get ahead in life as long as they hang onto that home. A tough lesson.

I never understood how anyone would want to live in these things! I worked in the office building next to the North Korea towers and you took your life into your own hands just walking out of the building to go to the shopping center down the way because of the traffic and lack of sidwalks.

I would see an old couple walking their dogs every day in our parking lots, right next to the roaring freeway. How sad that it was the only place the NK people had to go walking. A PARKING LOT!!!

Wel, actually, I kind of like the towers and being about 53 years old with no kids it is appealing. Yes,if they could redesign some of the area and put in a sidewalk, it might be appealing, its not much of a money maker but believe it or not the average age in OC for non-hispanic whites is 44.1 according to the 2008 census that means a lot of whites are moving out of the childbearing years and kids in another 10 years to being empty nesters and retirement.